The principle goal of this project is to identify the cellular states and signals that control cell types and synapses in the central nervous system. The identification of stem cells in the central nervous system has led to the realization that large numbers of stem cells are present during brain development and that they share many differentiation mechanisms with stem cells present in the adult brain. Detailed information on brain stem cells has been obtained with cells isolated from the cereberal cortex at a specific developmental time. One of the clearest examples of the common control of differentiation is that both fetal and adult stem cells differentiate efficiently into astrocytes when they are exposed to agents that activate the JAK/STAT signal pathway. The recent demonstration of this effect in the differentiation of stem cells isolated from the optic nerve shows that this is a very general pathway. We found that while stem cells isolated from an earlier stage of development could efficiently generate neurons and smooth muscle cells, they did not differentiate into astrocytes in response to JAK/STAT activation. Thus, there is a second pathway controlling the differentiation of astrocytes. We have also identified a pathway regulating astrocytic differentiation which involves a contact dependent cell surface signal. Current work is directed at identifying the molecular nature of this surface bound signal pathway. Future experiments will continue to define and comparing the precise mechanisms controlling neuronal and glial fate choice by stem cells in the fetal and adult nervous system. The interest in brain stem cells is significantly enhanced by the demonstration that functional neurons and glial cells can be obtained from stem cells. We have shown that excitatory and inhibitory neurons can be obtained from the hippocampus and that the synaptic function of these neurons is regulated by distinct neurotrophins. Neurons obtained under these standard conditions are derived from cells that do not divide in culture. We have demonstrated that stem cells derived from the hippocampus can proliferate in culture and then differentiate into excitatory and inhibitory neurons that form functional synpases. Brain derived neurotrophic factor (BDNF) promotes the function of both the excitatory, glutamatergic and the inhibitory, GABAergic synapse. In contrast the closely related factor NT3 only promotes glutamatergic synaptic function. The specificity of neurotrophin action demonstrates that stem cells generate neurons with synaptic properties expected for hippocampal neurons. Stem cells generate both neurons and astrocytes. Interactions between these two cell types are thought to control synapse formation and function in the brain. At the earliest stages of differentiation most hippocampal neurons synthesize vasoactive intestinal polypeptide (VIP). VIP stimulates astrocytes to release another soluble signal, activity dependent neurotrophic factor (ADNF) and in turn ADNF causes the neurons to release NT3. Both ADNF and NT3 act on these immature neurons to control the NMDA receptor, a major receptor for the excitatory neurotransmitter glutamate. These results suggest that an interaction between neurons and astrocytes promotes the early stages in synapse formation. Neuronal activity regulates VIP synthesis by adult hippocampal neurons suggesting that this pathway may continue to control synaptic function. Thus work on the earliest stages of brain development may lead to new therapies for the injured adult brain.